I am a retired person. My age is 60. I don’t have any assets except my savings. I don’t have insurance too. Along with my wife I live in my own house in a small town with cost of living about three thousand per month. I want to live an independent life. With only savings in my hand how shall I plan my finances such that I can take care of my expenditure on my own? How can I secure my further course of life? Please suggest. Thanks.

Hi,

Here is a small analysis - it is a bit general, as I don't know the specifics of your case.

Your only dependent is your wife (assumption - she doesn't have an income of her own), so you need insurance just enough to take care of her in case something happens to you. The sum insured should be such that out of its interest, your wife can live comfortably.

If her cost of living = 3000 / 2 = Rs. 1500 per month, which is Rs. 18000 per year, she would need around Rs. 2 lakhs to earn Rs. 18000 as interest on it. With some buffer, I would suggest that you get insurance of Rs. 2.5 lakhs. Go for term insurance, which would also be the cheapest for you.

As far as investments go, at the age of 60, you shouldn't invest too much in risky avenues. Since I don't know the amount of your savings, let me give you a general picture.

A portion of your investment should be liquid, so that emergencies (like medical emergencies) can be taken care of. You can have such funds as bank's flexible fixed deposits, wherein amount is kept as an FD, but can be withdrawn any time.

The balance amount - You can invest most of the balance amount in the government's Senior Citizen Scheme. You can also invest in normal bank FDs (with a monthly payment option) and mutual fund monthly income plans (although I personally do not prefer those).

Please remember to keep a small portion - say 10% - for equity mutual funds - they would give excellent returns in the long term and would help you beat inflation and the resulting increase in your cost of living.

Happy investing!

Hi again!

I forgot to mention one thing - you say that the only asset you have is your savings, but your biggest asset is your house!

First of all, since you own your house, you need not pay rent every month - that is such a big relief!

Secondly, if you and your wife do not have dependents, or do not intend to leave the house to the kids, you can also explore the possibility of something called a Reverse Mortgage. In this case, you would pledge your house to a bank, and the bank would pay you a fixed amount every month!